Thread Options
#2259298 - 09/07/21 01:48 PM New General QM Underwriting
ComplyCycle Offline
Gold Star
Joined: Dec 2014
Posts: 360
As a result of the following change, the DTI is drastically increasing for ARM loans under the new General QM rule. For example, using the below the DTI increased from 38% to 45% which could cause an applicant to not qualify for the ARM loan.

"The qualifying rate for a 3/6-Month Secured Overnight Financing Rate (SOFR) ARM changed from the greater of the note
rate plus 2 percent or the fully indexed rate, to the note rate plus the life cap (5 percent)."

I am wondering if banks are making any product/other changes to account for this? We will clearly see fewer ARM loan approvals now; are banks making a counteroffer for a fixed rate product? I am struggling to determine how to proceed forward. Thanks for your feedback.

Return to Top
Lending Compliance
#2259329 - 09/07/21 08:53 PM Re: New General QM Underwriting ComplyCycle
rlcarey Online
10K Club
Joined: Jul 2001
Posts: 77,220
Galveston, TX
Not offer ARMs that adjust any sooner than 5 years? Plus, there is no more DTI thresholds - so why would they not qualify?
The opinions expressed here should not be construed to be those of my employer:

Return to Top

Moderator:  Andy_Z